Updated 2/14/23

So many small business owners think doing business online means they save money. Well, you could save money, but then you would be compromising on your tech stack.

So many people think “online” means “free.” It used to, for sure.

For example, many small businesses ask me how much they should budget for marketing. The answer is 15% of your gross revenue. Sound high? Maybe. But do you want to grow? It goes with website hosts, too. If you’re paying less than $25 for a web host, it’s time to upgrade.

So what is the cost of doing business online? In this post, I detail my own SasS expenses to give you an idea of how much to budget.

I originally wrote this in 2018 when my SaaS subscriptions were $125. Those were the days. You won’t need all of the services, but you will have some. 

Software as a Service (Saas)

Software as a Service basically means you can get a service through a webpage. Wikipedia has a better definition. The point is, that digital space has a cost. Software over the cloud has a cost. Clouds are not free.

Traditional Services

Traditional services like accounting and law typically charge retainers and charge by 15 minute increments. We never question this. So why not value our own time?

This also includes monthly, recurring costs like cable (internet provider), electricity (to power and charge the devices you use to get to the cloud), cell phones to work remotely and call clients, as well as a percentage of your mortgage/rent or co-working fees.

This isn’t the place for it, but please understand your costs as an agency. Understanding your costs allows you to charge for your value.

My Monthly SaaS Costs

I spend quite a bit of money for cloud-based tools that I deem necessary to run my Marketing Consultancy.

Here are my monthly Saas Costs.

Of course, these are rounded to the nearest dollar and don’t include yearly licences.

• Postmatic (for content delivery and commenting) $20
• Dropbox (for website & photo backups) $21
• Backblaze (backup computer) $15
• Loom (video tutorials for clients) $10
• Lumen5 (video from text) $15
• Apple (cloud storage) $4
• Bitly (link shortening) $37
• Hootsuite (manage client social accounts) $75
• Xero (invoicing clients) $37
• Canva.com (making graphics) $27
• Calendly (to schedule appointments) $15
• Zoom (client meetings) $16
• GSuite (for domain name email) $24
• Plugin Rank (for plugin stats) $9
• Castos (podcast hosting) $49
• Mailchimp (email marketing) $21
• Termageddon (privacy policy) $10
• Basecamp (project management) $21
• Twitter Blue (edit tweets) $11

The total amount I spend monthly on things specifically to run my business is $467.

This doesn’t include traditional services and utilities like fiber internet ($67), cell phone ($99), electricity ($58) , or the $122 I can legally write off of my rent for my home office.

If my math is correct, that’s $813 I need just to operate monthly.

With a 20% self-employment tax (that we all should be saving), the client who you charge $1,000 a month only yields $233 profit.

We haven’t even talked about my time; just the fixed monthly nut.

The second and third, fourth and fifth clients start adding to the your net profit.

Why am I writing about job costing and the cost of doing online business?

As someone who spent almost 15 years in construction accounting, it baffles me that the majority of WordPress freelancers don’t:

• Track their time (even as a sample to average out)
• Attach costs to jobs
• Find out their operating cost before determining pricing

It’s another blog post or WordCamp talk to properly give an overview, but the point is that costs are costs. Figure out what you need in your workflow and do it. If you can’t afford those tools, then charge more to your clients.

There is no such thing as a free lunch.

Nothing is free. Your time isn’t free. Even if you don’t have to pay for software (like WordPress.org), someone still has to implement it, you still have to design a site, and it still has to be hosted. A modern website requires at least three different businesses that will be paid just to have a free website.

Your business matters. Stop trying to do everything for free. Invest in your dream. No one else should care about your business more than you do.

Once you figure out your operating costs, feel free to reach out to me when you’re ready to add marketing.